Estonian rail deal target for Jarvis

By Alistair Osborne, City Correspondent

12:00AM BST 16 Oct 2000

JARVIS, the infrastructure group, has teamed up with Ed Burkhardt, former chief of Britain's biggest freight train operator, English Welsh and Scottish Railways, to bid for a rail privatisation project in Estonia.

The Estonian government is privatising its entire freight rail business, which carries goods from the port of Tallinn and had operating profits of about $25 million (£17 million) last year. The privatisation is worth about $400 million (£271.6 million), comprising a modest upfront fee and undertakings from bidders to invest in the network.

Jarvis is part of one of three consortia bidding on the project. It has taken a 25 per cent stake alongside Mr Burkhardt's new Railworld group, a US freight rail operator. The remaining 50 per cent is held by Estonian partners. Mr Burkhardt resigned from EWS in July last year after falling out with its major shareholder, Wisconsin Central.

The other bidders are believed to be a joint venture between Swedish Rail and Serco and a US consortium, Rail America. Bids have to be in by the end of this month. Paris Moayedi, the chief executive of Jarvis', said: "Because of the years of under-investment in Britain, we're rather good at maintaining dilapidated railways. We're looking to use these skills abroad."

Jarvis is active in Peru and is in advanced talks for operations in Argentina and Brazil. The company is the biggest rail maintenance and renewal company in Britain, with an order book from Railtrack worth £800 million.

Mr Moayedi said these current contracts would not be affected by Railtrack's new regulatory regime, expected to be announced this week by rail regulator Tom Winsor. Mr Winsor said in July that he wanted annual cost savings from Railtrack of an average 4.2 per cent over the next five years. Achieving them would put pressure on its contractors' margins.